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> The assessing is done by the school as they are a trusted third party. That might be for some loans, but from my understanding everybody is guaranteed a loan

> The assessing is done by the school as they are a trusted third party. That might be for some loans, but from my understanding everybody is guaranteed a loan, regardless of their grades. The point was the government would back the loans so those who were less affluent could also go to school. The end result is we tried to help the poor, and screwed everybody else along the way. Not only did the poor get a bad deal, people who could have normally afforded school got slotted into these bad deals too. People like to blame the schools for raising the prices, but that simply how supply and demand works. Schools can hold X people, if > X people want in then the price goes up. Schools can also only expand so fast. The fact is, not everybody needs to go to a 4 year school. The process of making it near mandatory lowers the value it brings in general as curriculum is adjusted for a much wider group of people -- generally by lowering the bar. This is in part because you now have a bunch of people given loans who without getting that degree probably won't be able to pay back that first year of school they failed out in -- even more so when that is north of 20k. Before we started guaranteeing loans it as either your money, your parents money, or somebody loaning you money who truly was invested in vetting candidates abilities to finish school, get a job, and pay the loan back. With prices generally being lower the loans were smaller too. A much better way to have addressed the issue with poor people would have been to set up grants, vetted students based of merit, and provide grants for those kids who showed promise. The end result is paying a lot less than the mess we have today, and it would have not dragged down those who would have probably been able to afford school on their own accord before this mess happened.

lkrubner 7y ago
"but that simply how supply and demand works" Are you sure? Because the normal way of thinking about "supply and demand" is to suggest that prices will go down if supply grows faster than demand, which is what happened for nearly all of the 20th Century. And if that process has stopped, then we need to ask why. Please consider the data here: https://nces.ed.gov/programs/digest/d17/tables/dt17_302.60.asp https://nces.ed.gov/programs/digest/d17/tables/dt17_302.60.a... Try to explain these 3 data points: (Young people in college) 1970 25.7% 1996 35.5% 2016 41.2% There was no price surge when youth participation going to college went from 25% to 35% but there was a huge price surge when participation went from 35% to 41%. And the early surge is a much larger surge. So why did prices only go up during the latter era?
- mbrumlow 7y ago
  Those numbers need adjusted for population size. But I would guess that schools stopped growing. I also think looking at the past to predict the future is probably a bad way to look at things. I know I would not buy stocks that way.
- sokoloff 7y ago
  There was a price surge from 197[1] to 1996. Taking the 25 year period from 1971 to 1996 and then the 20 year period 1996 to 2016, the CAGR in the first period was 7.6/6.7% and in the second period was only 4.6%/5.3% for 4-year public/private colleges respectively. Data: [0] That data shows there was a higher rate of price increase (in nominal dollars) during the first period than the second. Now, general inflation was also higher in the first period (5.1%/6.9% CAGR of wage increases for men/women vs 2.5/3.4% in the latter period). Taking the mathematically unsound step to average the public and private increases and average the wage increase rates for men and women, and compare the two, it seems that college costs rose 1.1% faster than wages in the first period and 2.0% faster than wages in the second period. Is that effect driven by college costs rising faster or wages rising more slowly? [0] - https://college-education.procon.org/view.resource.php?resourceID=005532 https://college-education.procon.org/view.resource.php?resou...

lkrubner 7y ago

"but that simply how supply and demand works" Are you sure? Because the normal way of thinking about "supply and demand" is to suggest that prices will go down if supply grows faster than demand, which is what happened for nearly all of the 20th Century. And if that process has stopped, then we need to ask why. Please consider the data here: https://nces.ed.gov/programs/digest/d17/tables/dt17_302.60.asp https://nces.ed.gov/programs/digest/d17/tables/dt17_302.60.a... Try to explain these 3 data points: (Young people in college) 1970 25.7% 1996 35.5% 2016 41.2% There was no price surge when youth participation going to college went from 25% to 35% but there was a huge price surge when participation went from 35% to 41%. And the early surge is a much larger surge. So why did prices only go up during the latter era?

mbrumlow 7y ago
Those numbers need adjusted for population size. But I would guess that schools stopped growing. I also think looking at the past to predict the future is probably a bad way to look at things. I know I would not buy stocks that way.
sokoloff 7y ago
There was a price surge from 197[1] to 1996. Taking the 25 year period from 1971 to 1996 and then the 20 year period 1996 to 2016, the CAGR in the first period was 7.6/6.7% and in the second period was only 4.6%/5.3% for 4-year public/private colleges respectively. Data: [0] That data shows there was a higher rate of price increase (in nominal dollars) during the first period than the second. Now, general inflation was also higher in the first period (5.1%/6.9% CAGR of wage increases for men/women vs 2.5/3.4% in the latter period). Taking the mathematically unsound step to average the public and private increases and average the wage increase rates for men and women, and compare the two, it seems that college costs rose 1.1% faster than wages in the first period and 2.0% faster than wages in the second period. Is that effect driven by college costs rising faster or wages rising more slowly? [0] - https://college-education.procon.org/view.resource.php?resourceID=005532 https://college-education.procon.org/view.resource.php?resou...